Powerscourt

By Powerscourt on 21/09/2020

Powerscourt Coronavirus Briefing – 21 September 2020

ANALYSIS

Expect a raft of coverage in the next 24 hours on the path of the virus through the US where the official death toll will pass 200,000 today or tomorrow. The number of new cases had been falling since late July but the total has been inching upwards in recent days. The New York Times points out that deaths there are two-and-a-half times higher that American losses in the Vietnam and Korean wars combined.

Meanwhile, the Financial Times writes that Chinese share of global trade is at an all-time high “thanks largely to a pandemic that originated within its borders.” The FT reports that China had a $34 billion trade surplus with the US in August, the highest in almost two years.

In the UK, Professor Chris Whitty and Sir Patrick Vallance, the Chief Scientific Officer and Chief Medical Officer to the government, became potent symbols of the growing threat to the UK from coronavirus in the spring, a de facto scientific war cabinet for the UK government facing a terrifying new biohazard.

This morning they will reprise this role at a briefing in Downing Street as they warn the UK population that the coronavirus figures are heading in the “wrong direction”, according to multiple previews of their presentations, as they try to prepare the population for a difficult winter, with up to six months of additional restrictions ahead and the possibility of another full national lockdown.

Secretary of State for Health Matt Hancock appeared to signal that the nuclear option had not been ruled out, telling Andrew Marr on Sunday: “We have to be prepared to take action if that’s what’s necessary.”

Prime Minister Boris Johnson, reeling from a catalogue of mis-steps over schools, testing and government guidance on the virus in general, is caught between a rock and a hard place. The scientists are now clear that initiatives such as the “rule of six” imposed last week are not going to be adequate to stop the virus as the UK heads into winter, with the usual seasonal pressures on the NHS expected to amplify pressures from rising COVID-19 numbers.

On Sunday, 3,899 new infections were reported in the UK, slightly down from a four-month high of 4,422 on Saturday. Some scientists reportedly favour what’s being described as a “circuit break”: a short but stringent national lockdown designed to curb the rise of the virus. Economists and business leaders may beg to differ.

With the government’s political capital at a low ebb and citizens exhausted from the curbs on their lives and the economic impact of the virus, adherence to any new rules can’t be taken for granted. Meanwhile, many Tory MPs, including the powerful 1922 Committee and Chancellor of the Exchequer Rishi Sunak, are warning the Prime Minister that a second national lockdown of any duration would be disastrous for the UK economy and that the emergency powers which have been used in previous lockdowns are a breach of civil liberties.

The Chancellor is set to extend the Treasury’s UK-wide programme of business support loans to help companies affected by the coronavirus pandemic, the FT reported on Sunday.

For some time, the coronavirus death rate in Europe has been extremely low despite rising infection rates, with some people arguing that this points to a case for keeping the economy open even as infection levels rise. But deaths and hospitalisations are now rising across Europe.

Over the weekend France initiated what it describes as a “plan blanc” (“white plan”), essentially allowing hospitals in badly hit regions to take emergency action to deal with hospitalisations. France’s daily infection rate is now over 13,000.

In Spain, soaring levels of the virus in Madrid have been met with indecision as to how to tackle the outbreak, with national and regional governments fighting over the best approach and severe pressure on health services in the region.

The US, still the epicentre of the pandemic, is approaching the grim milestone of 200,000 deaths as infection rates in the South and West remain stubbornly high.

Chinese shares were lower Monday amid disappointing data on consumer staples and financials, but the Nikkei Index rose.

 

WHAT ARE COMPANIES SAYING?

 

Consumer & Retail 

Carnival
The world’s largest cruise operator announced that its second Costa Cruises ship will be returning to the seas with guests. The company has developed a health and safety protocol including COVID-19 swab testing for all guests and crew, temperature screening, tours of destinations on protected excursions, and physical distancing thanks partly to a reduction in the number of passengers.

Superdry
The retailer reported a loss before tax of £41.8m and revenues down almost 20%. The company said the reduced revenues reflected a planned move away from persistent discounting as well as the impact of the pandemic on its fourth quarter, in which its stores were closed. CEO Julian Dunkerton said: “We are delivering on the reset of the business, despite the impacts of the pandemic. This has included re-invigorating the store design and layout, preparing for a relaunch of our website, and significantly increasing the number of options available both in store and online.”

 

Industrials 

FirstGroup
The transport group announced that the Department for Transport has extended emergency funding for the UK rail industry for the next six to 18 months. During the term of the arrangements, the DfT will continue to waive the revenue, cost and contingent capital risk of the train operating companies and will pay them a fixed management fee. CEO Matthew Gregory said: “The Government has extended its funding of the rail industry whilst demand for services remains heavily affected by coronavirus, and we are pleased that the vital nature of rail services to communities and local economies is being recognised.”

G4S
The security services company provided an update for the first eight months of 2020, reporting ‘resilient’ revenues that were just 1.9% lower than 2019. The company said this was offset by cost control and reduced interest costs as a result of refinancing and reducing net debt. Group CEO Ashley Almanza said: “G4S today is a focused global business delivering technology-enabled security solutions. The benefits of our strategy, strong execution and timely response to Covid-19 continue to be reflected in the Group’s results during 2020 with resilient revenue, earnings and cash flow.”

 

TMT

Informa
The company announced its half year results, reporting revenues and profits significantly down on 2019. The company said COVID-19 has had a particular impact on its physical events business. The company announced the next stage of its COVID-19 plan, with CEO Stephen A Carter saying: “This package of measures extends our Postponement Programme to mid/late Spring 2021, further lowers costs, reduces cash expenditures and strengthens our balance sheet, underpinning full year revenues of c.£1.7bn/£1.7bn-, which will also serve as our baseline for 2021.”

 

IN THE NEWS

Sunak to extend business support loans as Covid-19 spread worsensFinancial Times

Economy faces losses of £250 million a day during second wave – The Times

Britain braces for an unprecedented wave of insolvencies – The Daily Telegraph




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